Annual QTA Review to Ensure Compliance

As  we kick off the new year, it’s important to perform an annual review of your Qualified Transportation Fringe Benefit plan to ensure its compliance with applicable law.

Changes to employer-provided parking rules

New tax rules regarding employer-provided parking went into effect in 2018. With the Tax Cuts and Jobs Act, rules changed for employers who provide qualified transportation fringe benefits (i.e., Transit and Parking) to employees. For-profit employers are no longer able to take a deduction for these benefits, and non-profit organizations are deemed to have unrelated business taxable income (UBTI) in the amount of the benefits provided to employees.

Rules affect employers that own or lease parking facilities

The application of these rules is fairly straightforward to employers sponsoring transportation plans under which expenses are paid by the employer or reimbursed to employees through salary-reduction contributions. However, the rules also apply to situations in which an employer provides employee parking at employer-owned or leased parking facility.

Interim guidance from the IRS

The IRS issued interim guidance on December 10, 2018, to assist employers that provide parking to employees in employer-owned or leased parking facilities on how to apply the new rules. That guidance is available at https://www.irs.gov/pub/irs-drop/n-18-99.pdf.